Home / China rate move beats French strikes to push down crude futures

China rate move beats French strikes to push down crude futures

October 19, 2010 by Daniels Trading

Crude oil futures sold off on Tuesday after the Chinese central bank said that it would raise its lending and deposit rates and attempt to cut back on inflation in the world's second-largest economy.

The news from China is pushing back against bullish pressure from France, where continued strikes are threatening to paralyze the country by cutting off supplies of fuel and shutting down refineries. However, the effect of the French strikes is ambiguous – in the end, it might end up reducing demand for crude oil, since the refineries won't need any fresh supplies if they're shut down.

"The surprise Chinese rate hike has sent the dollar higher and that’s pushing oil lower," Carl Larry, president of Oil Outlooks & Opinions in Houston, told Bloomberg News ."It's a double whammy, this could cause weaker demand along with strengthening the dollar."

A general flight to safety is occurring across a broad swathe of important markets, and that's driving the dollar higher and putting pressure on equities and commodities alike.

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This material is conveyed as a solicitation for entering into a derivatives transaction.

This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.

Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.

You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.